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Easterly Government Properties Reports First Quarter 2019 Results
WASHINGTON–(BUSINESS WIRE)–Easterly Government Properties, Inc. (NYSE: DEA) (the “Company” or
“Easterly”), a fully integrated real estate investment trust (“REIT”)
focused primarily on the acquisition, development and management of
Class A commercial properties leased to the U.S. Government, today
announced its results of operations for the quarter ended March 31, 2019.
Highlights for the Quarter Ended March 31, 2019:
- Net loss of $0.5 million, or $0.01 per share on a fully diluted basis
- FFO of $22.0 million, or $0.31 per share on a fully diluted basis
-
FFO, as Adjusted of $20.8 million, or $0.29 per share on a fully
diluted basis - CAD of $18.5 million
-
Completed the acquisition of the final three of the 14 properties in
the Company’s previously announced portfolio acquisition. The three
properties represent an aggregate of 355,426 square feet and were
acquired for a combined purchase price of $152.5 million -
Issued 6.7 million shares of common stock in exchange for
approximately $119.2 million in gross proceeds, settling a portion of
the forward sales agreements entered into in connection with the June
2018 underwritten public offering of 20.7 million shares of the
Company’s common stock -
Launched a new ATM program pursuant to which the Company may issue and
sell shares of common stock having an aggregate offering price of up
to $200.0 million including through the sale of shares on a forward
basis (“2019 ATM Program”) - Maintained portfolio occupancy at 100%
“Easterly is a company built on secure, recurring cash flows backed by
the full faith and credit of our largest tenant, the U.S. Government,”
said William C. Trimble, III, Easterly’s Chief Executive Officer. “We
believe the underlying credit quality of our 100% leased portfolio
provides for superior risk adjusted returns.”
Financial Results for the Quarter Ended March 31, 2019:
Net loss of $0.5 million, or $0.01 per share on a fully diluted basis
FFO of $22.0 million, or $0.31 per share on a fully diluted basis
FFO, as Adjusted of $20.8 million, or $0.29 per share on a fully diluted
basis
CAD of $18.5 million
Portfolio Operations
As of March 31, 2019, the Company wholly owned 65 operating properties
in the United States, encompassing approximately 5.6 million square feet
in the aggregate, including 63 operating properties that were leased
primarily to U.S. Government tenant agencies and two operating
properties that were entirely leased to private tenants. As of March 31,
2019, the portfolio had a weighted average age of 13.0 years, based upon
the date the property was built or renovated-to-suit, was 100% occupied,
and had a weighted average remaining lease term of 7.3 years.
Acquisitions and Development Activities
On January 31, 2019, the Company completed the acquisition of the final
three of the 14 properties in the Company’s previously announced
portfolio acquisition. The three properties represent an aggregate of
355,426 square feet and were acquired for a combined purchase price of
$152.5 million. The three properties include:
-
DEA – Sterling, VA
DEA – Sterling serves as a
special testing and research laboratory to assist the Drug Enforcement
Administration (DEA) in performing mission critical forensic analyses.
The 49,692-square foot facility was built-to-suit in 2001 and includes
evidence rooms, computer labs, cryptography and various other
specialized laboratories. The facility is 100% leased through 2020. -
FDA – College Park, MD
FDA – College Park houses a
laboratory for the Food and Drug Administration’s (FDA) Center for
Food Safety and Applied Nutrition (CFSAN), one of the FDA’s seven
product-oriented centers. The 80,677-square foot office and laboratory
was built-to-suit in 2004 and is 100% leased through 2029. The
facility is part of the University of Maryland’s Research Park and is
located two blocks from CFSAN headquarters in the Harvey W. Wiley
Building, forming a campus which links university researchers,
students and staff with federal laboratories and private sector
companies. -
Various GSA – Portland, OR
Various GSA – Portland, a
Class A trophy multi-tenanted asset, was built in 2002 and is
strategically located within Portland’s Central City Plan District
along the MAX light rail system. The 225,057-square foot facility is
occupied by tenants such as the U.S. Department of Agriculture (USDA),
U.S. Army Corp of Engineers (ACOE), Federal Bureau of Investigation
(FBI) and the Bureau of Alcohol, Tobacco, Firearms and Explosives
(ATF).
Balance Sheet and Capital Markets Activity
As of March 31, 2019, the Company had total indebtedness of $819.8
million comprised of $184.5 million outstanding on its revolving credit
facility, $150.0 million outstanding on its 2018 term loan facility,
$100.0 million outstanding on its 2016 term loan facility, $175.0
million of senior unsecured notes, and $210.3 million of mortgage debt
(excluding unamortized premiums and discounts and deferred financing
fees). At March 31, 2019, Easterly’s outstanding debt had a weighted
average maturity of 6.2 years and a weighted average interest rate of
3.7%. As of March 31, 2019, Easterly’s Net Debt to total enterprise
value was 36.6% and its Net Debt to annualized quarterly EBITDA and
Adjusted Net Debt to annualized quarterly pro-forma EBITDA ratios were
6.7x and 6.1x, respectively.
On March 4, 2019, the Company launched its 2019 ATM Program, pursuant to
which the Company may issue and sell shares of common stock having an
aggregate offering price of up to $200.0 million from time to time in
negotiated transactions or transactions that are deemed to be
“at-the-market” offerings through the applicable sales agents. Under the
2019 ATM Program, the Company may also enter into one or more forward
transactions under separate master forward sale confirmations and
related supplemental confirmations with certain sales agents or their
affiliates for the sale of shares of common stock on a forward basis.
During the quarter ended March 31, 2019, the Company issued 366,455
shares of the Company’s common stock at a weighted average price of
$17.93 per share through the Company’s previously existing ATM program,
raising gross proceeds of approximately $6.6 million to maintain balance
sheet strength.
Dividend
On May 2, 2019, the Board of Directors of Easterly approved a cash
dividend for the first quarter of 2019 in the amount of $0.26 per common
share. The dividend will be payable June 27, 2019 to shareholders of
record on June 10, 2019.
Outlook for the 12 Months Ending December 31,
2019
The Company is reiterating its guidance for 2019 FFO per share on a
fully diluted basis in a range of $1.16 – $1.20.
Low | High | ||||||||||||
Net income (loss) per share – fully diluted basis | $ | 0.04 | 0.08 | ||||||||||
Plus: real estate depreciation and amortization | $ | 1.12 | 1.12 | ||||||||||
FFO per share – fully diluted basis | $ | 1.16 | 1.20 | ||||||||||
This guidance assumes $200 million of acquisitions, not including the Q1
2019 closings of the final three properties in the 14-property
portfolio, and $75 – $100 million of gross development-related
investment during 2019.
The Company’s guidance for 2019 FFO per share on a fully diluted basis
represents expected FFO, as Adjusted per share on a fully diluted basis
growth of approximately 6% to 11%.
This guidance is forward-looking and reflects management’s view of
current and future market conditions. The Company’s actual results may
differ materially from this guidance.
Non-GAAP Supplemental Financial Measures
This section contains definitions of certain non-GAAP financial
measures and other terms that the Company uses in this press release
and, where applicable, the reasons why management believes these
non-GAAP financial measures provide useful information to investors
about the Company’s financial condition and results of operations and
the other purposes for which management uses the measures. These
measures should not be considered in isolation or as a substitute for
measures of performance in accordance with GAAP. Additional detail can
be found in the Company’s most recent annual report on Form 10-K and
quarterly report on Form 10-Q, as well as other documents filed with or
furnished to the SEC from time to time.
Cash Available for Distribution (CAD) is a non-GAAP financial
measure that is not intended to represent cash flow for the period and
is not indicative of cash flow provided by operating activities as
determined under GAAP. CAD is calculated in accordance with the current
Nareit definition as FFO minus normalized recurring real estate-related
expenditures and other non-cash items and nonrecurring expenditures. CAD
is presented solely as a supplemental disclosure because the Company
believes it provides useful information regarding the Company’s ability
to fund its dividends. Because all companies do not calculate CAD the
same way, the presentation of CAD may not be comparable to similarly
titled measures of other companies.
EBITDA is calculated as the sum of net income (loss) before
interest expense, income taxes, depreciation and amortization. EBITDA is
not intended to represent cash flow for the period, is not presented as
an alternative to operating income as an indicator of operating
performance, should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP is not
indicative of operating income or cash provided by operating activities
as determined under GAAP and may be presented on a pro forma basis.
EBITDA is presented solely as a supplemental disclosure with respect to
liquidity because the Company believes it provides useful information
regarding the Company’s ability to service or incur debt. Because all
companies do not calculate EBITDA the same way, the presentation of
EBITDA may not be comparable to similarly titled measures of other
companies.
Funds From Operations (FFO) is defined, in accordance with the
Nareit FFO White Paper – 2018 Restatement as net income (loss),
calculated in accordance with GAAP, excluding depreciation and
amortization related to real estate, gains and losses from the sale of
certain real estate assets, gains and losses from change in control and
impairment write-downs of certain real estate assets and investments in
entities when the impairment is directly attributable to decreases in
the value of depreciable real estate held by the entity. FFO is a widely
recognized measure of REIT performance. Although FFO is a non-GAAP
financial measure, the Company believes that information regarding FFO
is helpful to shareholders and potential investors.
Funds From Operations, as Adjusted (FFO, as Adjusted) adjusts FFO
to present an alternative measure of our operating performance, which,
when applicable, excludes the impact of acquisition costs, straight-line
rent, above-/below-market leases, non-cash interest expense, non-cash
compensation and other non-cash items. By excluding these income and
expense items from FFO, as Adjusted, the Company believes it provides
useful information as these items have no cash impact. In addition, by
excluding acquisition related costs the Company believes FFO, as
Adjusted provides useful information that is comparable across periods
and more accurately reflects the operating performance of the Company’s
properties.
Net Debt and Adjusted Net Debt. Net Debt represents
consolidated debt (reported in accordance with GAAP) adjusted to exclude
unamortized premiums and discounts and deferred financing fees, less
cash and cash equivalents. By excluding these items, the result provides
an estimate of the contractual amount of borrowed capital to be repaid,
net of cash available to repay it. The Company believes this calculation
constitutes a beneficial supplemental non-GAAP financial disclosure to
investors in understanding its financial condition. Adjusted Net Debt is
Net Debt reduced by 1) the lesser of i) anticipated lump-sum
reimbursement amounts and ii) the cost to date for each project under
construction and 2) 40% times the amount by which the cost to date
exceeds anticipated lump-sum reimbursement amounts for each project
under construction. These adjustments are made to 1) remove the
estimated portion of each project under construction that has been
financed with debt which may be repaid with anticipated cost
reimbursement payments from the US Government and 2) remove the
estimated portion of each project under construction, in excess of
anticipated lump-sum reimbursements, that has been financed with debt
but has not yet produced earnings. See page 19 of the Company’s Q1 2019
Supplemental Information Package for further information. The Company’s
method of calculating Net Debt and Adjusted Net Debt may be different
from methods used by other REITs and, accordingly, may not be comparable
to such other REITS.
Other Definitions
Fully diluted basis assumes the exchange of all outstanding
common units representing limited partnership interests in the Company’s
operating partnership, the full vesting of all shares of restricted
stock, and the exchange of all earned and vested LTIP units in the
Company’s operating partnership for shares of common stock on a
one-for-one basis, which is not the same as the meaning of “fully
diluted” under GAAP.
Conference Call Information
The Company will host a webcast and conference call at 10:00 a.m.
Eastern Standard time on May 7, 2019 to review the first quarter 2019
performance, discuss recent events and conduct a question-and-answer
session. The number to call is 1-877-705-6003 (domestic) and
1-201-493-6725 (international). A live webcast will be available in the
Investor Relations section of the Company’s website. A replay of the
conference call will be available through May 21, 2019 by dialing
844-512-2921 (domestic) and 1-412-317-6671 (international) and entering
the passcode 13689856. Please note that the full text of the press
release and supplemental information package are available through the
Company’s website at ir.easterlyreit.com.
About Easterly Government Properties, Inc.
Easterly Government Properties, Inc. (NYSE:DEA) is based in Washington,
D.C., and focuses primarily on the acquisition, development and
management of Class A commercial properties that are leased to the U.S.
Government. Easterly’s experienced management team brings specialized
insight into the strategy and needs of mission-critical U.S. Government
agencies for properties leased to such agencies either directly or
through the U.S. General Services Administration (GSA). For further
information on the company and its properties, please visit www.easterlyreit.com.
Forward Looking Statements
We make statements in this press release that are considered
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section
21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, which are usually identified by the use of words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,”
“plans,” “projects,” “seeks,” “should,” “will,” and variations of such
words or similar expressions and include our guidance with respect to
Net income (loss) and FFO per share on a fully diluted basis. We
intend these forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and are including this
statement in this press release for purposes of complying with those
safe harbor provisions. These forward-looking statements reflect our
current views about our plans, intentions, expectations, strategies and
prospects, which are based on the information currently available to us
and on assumptions we have made. Although we believe that our
plans, intentions, expectations, strategies and prospects as reflected
in or suggested by those forward-looking statements are reasonable, we
can give no assurance that the plans, intentions, expectations or
strategies will be attained or achieved. Furthermore, actual
results may differ materially from those described in the
forward-looking statements and will be affected by a variety of risks
and factors that are beyond our control including, without limitation:
risks associated with our dependence on the U.S. Government and its
agencies for substantially all of our revenues; risks associated with
ownership and development of real estate; the risk of decreased rental
rates or increased vacancy rates; loss of key personnel; general
volatility of the capital and credit markets and the market price of our
common stock; the risk we may lose one or more major tenants;
difficulties in completing and successfully integrating acquisitions;
failure of acquisitions or development projects to occur at anticipated
levels or to yield anticipated results; risks associated with actual or
threatened terrorist attacks; intense competition in the real estate
market that may limit our ability to attract or retain tenants or
re-lease space; insufficient amounts of insurance or exposure to events
that are either uninsured or underinsured; uncertainties and risks
related to adverse weather conditions, natural disasters and climate
change; exposure to liability relating to environmental and health and
safety matters; limited ability to dispose of assets because of the
relative illiquidity of real estate investments and the nature of our
assets; exposure to litigation or other claims; risks associated with
breaches of our data security; risks associated with our indebtedness;
and other risks and uncertainties detailed in the “Risk Factors” section
of our Form 10-K for the year ended December 31, 2018, filed with the
Securities and Exchange Commission on February 28, 2019 and under the
heading “Risk Factors” in our other public filings. In addition,
our anticipated qualification as a real estate investment trust involves
the application of highly technical and complex provisions of the
Internal Revenue Code of 1986, or the Code, and depends on our ability
to meet the various requirements imposed by the Code through actual
operating results, distribution levels and diversity of stock ownership.
We assume no obligation to update publicly any forward looking
statements, whether as a result of new information, future events or
otherwise.
Balance Sheet |
|||||||||||
(Unaudited, in thousands, except share amounts) |
|||||||||||
March 31, 2019 | December 31, 2018 | ||||||||||
Assets | |||||||||||
Real estate properties, net | $ | 1,771,788 | $ | 1,626,617 | |||||||
Cash and cash equivalents | 8,663 | 6,854 | |||||||||
Restricted cash | 4,662 | 4,251 | |||||||||
Deposits on acquisitions | 3,250 | 7,070 | |||||||||
Rents receivable | 23,505 | 21,140 | |||||||||
Accounts receivable | 13,650 | 11,690 | |||||||||
Deferred financing, net | 2,281 | 2,459 | |||||||||
Intangible assets, net | 170,157 | 165,668 | |||||||||
Interest rate swaps | 3,147 | 4,563 | |||||||||
Prepaid expenses and other assets | 15,638 | 11,238 | |||||||||
Total assets | $ | 2,016,741 | $ | 1,861,550 | |||||||
Liabilities | |||||||||||
Revolving credit facility | 184,500 | 134,750 | |||||||||
Term loan facilities, net | 248,329 | 248,238 | |||||||||
Notes payable, net | 173,804 | 173,778 | |||||||||
Mortgage notes payable, net | 208,780 | 209,589 | |||||||||
Intangible liabilities, net | 29,936 | 30,835 | |||||||||
Interest rate swaps | 3,398 | 1,797 | |||||||||
Accounts payable and accrued liabilities | 38,248 | 37,310 | |||||||||
Total liabilities | 886,995 | 836,297 | |||||||||
Equity | |||||||||||
Common stock, par value $0.01, 200,000,000 shares authorized, |
680 | 608 | |||||||||
Additional paid-in capital | 1,127,938 | 1,017,415 | |||||||||
Retained earnings | 12,381 | 12,831 | |||||||||
Cumulative dividends | (154,944 | ) | (139,103 | ) | |||||||
Accumulated other comprehensive income (loss) | (219 | ) | 2,412 | ||||||||
Total stockholders’ equity | 985,836 | 894,163 | |||||||||
Non-controlling interest in Operating Partnership | 143,910 | 131,090 | |||||||||
Total equity | 1,129,746 | 1,025,253 | |||||||||
Total liabilities and equity | $ | 2,016,741 | $ | 1,861,550 | |||||||
Income Statement |
|||||||||||
(Unaudited, in thousands, except share and per share amounts) |
|||||||||||
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | ||||||||||
Revenues | |||||||||||
Rental income | $ | 48,488 | $ | 34,831 | |||||||
Tenant reimbursements | 1,584 | 941 | |||||||||
Other income | 535 | 202 | |||||||||
Total revenues | 50,607 | 35,974 | |||||||||
Expenses | |||||||||||
Property operating | 9,963 | 6,560 | |||||||||
Real estate taxes | 5,755 | 3,700 | |||||||||
Depreciation and amortization | 22,451 | 14,634 | |||||||||
Acquisition costs | 470 | 224 | |||||||||
Corporate general and administrative | 4,317 | 3,459 | |||||||||
Total expenses | 42,956 | 28,577 | |||||||||
Other expenses | |||||||||||
Interest expense, net | (8,132 | ) | (5,582 | ) | |||||||
Net income (loss) | (481 | ) | 1,815 | ||||||||
Non-controlling interest in Operating Partnership | 65 | (296 | ) | ||||||||
|
|||||||||||
Net income (loss) available to Easterly Government Properties, |
$ | (416 | ) | $ | 1,519 | ||||||
Net income (loss) available to Easterly Government Properties, |
|||||||||||
Basic | $ | (0.01 | ) | $ | 0.03 | ||||||
Diluted | $ | (0.01 | ) | $ | 0.03 | ||||||
Weighted-average common shares outstanding: | |||||||||||
Basic | 61,225,926 | 45,008,062 | |||||||||
Diluted | 61,225,926 | 46,018,040 | |||||||||
Net income (loss), per share – fully diluted basis | $ | (0.01 | ) | $ | 0.03 | ||||||
Weighted average common shares outstanding – | |||||||||||
fully diluted basis |
70,831,727 | 53,813,881 | |||||||||
EBITDA, FFO and CAD |
|||||||||||
(Unaudited, in thousands, except share and per share amounts) |
|||||||||||
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | ||||||||||
Net income (loss) | $ | (481 | ) | $ | 1,815 | ||||||
Depreciation and amortization | 22,451 | 14,634 | |||||||||
Interest expense | 8,132 | 5,582 | |||||||||
EBITDA | $ | 30,102 | $ | 22,031 | |||||||
Pro forma adjustments(1) | 793 | ||||||||||
Pro forma EBITDA | $ | 30,895 | |||||||||
Net income (loss) | $ | (481 | ) | $ | 1,815 | ||||||
Depreciation and amortization | 22,451 | 14,634 | |||||||||
Funds From Operations (FFO) | $ | 21,970 | $ | 16,449 | |||||||
Adjustments to FFO: | |||||||||||
Acquisition costs | 470 | 224 | |||||||||
Straight-line rent and other non-cash adjustments | (974 | ) | (1,794 | ) | |||||||
Above-/below-market leases | (1,729 | ) | (2,279 | ) | |||||||
Non-cash interest expense | 322 | 264 | |||||||||
Non-cash compensation | 734 | 864 | |||||||||
Funds From Operations, as Adjusted | $ | 20,793 | $ | 13,728 | |||||||
FFO, per share – fully diluted basis | $ | 0.31 | $ | 0.31 | |||||||
FFO, as Adjusted, per share – fully diluted basis | $ | 0.29 | $ | 0.26 | |||||||
Funds From Operations, as Adjusted | $ | 20,793 | $ | 13,728 | |||||||
Acquisition costs | (470 | ) | (224 | ) | |||||||
Principal amortization | (836 | ) | (763 | ) | |||||||
Maintenance capital expenditures | (902 | ) | (466 | ) | |||||||
Contractual tenant improvements | (38 | ) | (95 | ) | |||||||
Cash Available for Distribution (CAD) | $ | 18,547 | $ | 12,180 | |||||||
Weighted average common shares outstanding – | |||||||||||
fully diluted basis | 70,831,727 | 53,813,881 | |||||||||
1 Pro-forma assuming a full quarter of operations from the three properties acquired in the first quarter of 2019. |
March 31, 2019 | ||||||
Total Debt(1) | $ | 819,810 | ||||
Less: Cash and cash equivalents | (8,663 | ) | ||||
Net Debt | $ | 811,147 | ||||
Less: Adjustment for projects under construction(2) | (59,949 | ) | ||||
Adjusted Net Debt | $ | 751,198 | ||||
1 Excludes unamortized premiums / discounts and deferred financing fees. |
2 See definition of Adjusted Net Debt on Page 4. |
Contacts
Easterly Government Properties, Inc.
Lindsay S. Winterhalter
Vice
President, Investor Relations & Operations
202-596-3947
[email protected]
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Cannabis
Rubicon Organics Reports Q1 2024 Financial Results
SCHWAZZE
Schwazze Announces First Quarter 2024 Financial Results
Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time
DENVER, May 15, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the first quarter ended March 31, 2024.
“We delivered another period of revenue growth in Q1 as we further refined our retail strategy while contending with the prolonged competitive challenges in Colorado and New Mexico,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Throughout the quarter, we continued to sharpen our pricing and promotional efforts while enhancing the in-store experience, widening assortment, improving in-stock position, and advancing our loyalty program to attract and retain new customers. We also strengthened our wholesale business with quarter-over-quarter growth, while surpassing 30% total door penetration across both states.”
“The Colorado market remains highly competitive with more than 680 active recreational licenses, underscoring the importance of delivering an exceptional customer experience and fully integrated retail support program. Although retail pricing has recently stabilized, Colorado sales in Q1 were down 10% year-over-year due to lower volumes. Nonetheless, we significantly outpaced the market as our sales were up 9%, demonstrating the effectiveness of our operating playbook to compete in challenging environments. We expect to continue driving improvements in customer acquisition, retention, and loyalty as we further increase market share in the state.”
“In New Mexico, the proliferation of new licenses continued to outpace state cannabis sales as store count in Q1 increased 31% year-over-year while the market grew only 13%. In addition to pricing and promotional efforts, we’ve focused on driving traffic into our stores by expanding assortment with high quality flower and delivering an elevated customer experience. The New Mexico regulatory body has also increased its license enforcement efforts in recent months, contributing to more than 70 store closures and a 33% sequential decrease in net new store openings in the first quarter. We will continue to support the New Mexico Cannabis Control Division as it develops its regulatory framework.”
“Over the past four years we have rapidly scaled our footprint through 13 acquisitions, building a leading retail presence in both Colorado and New Mexico. We are beginning to see positive momentum from our pricing and promotional strategy and will remain focused on driving operating efficiencies while further optimizing our assets as we consolidate cultivation facilities and eliminate underperforming stores that do not meet our high-margin thresholds. We believe these initiatives, coupled with our operating playbook and strict cost controls, will enable us to return to stronger levels of profitability moving forward.”
First Quarter 2024 Financial Summary
$ in Thousands USD |
Q1 2024 |
Q4 2023 |
Q1 2023 |
Total Revenue |
$41,601 |
$43,325 |
$40,001 |
Gross Profit |
$17,934 |
$7,034[1] |
$21,849 |
Operating Expenses |
$20,643 |
$23,276 |
$16,199 |
Income (Loss) from Operations |
$(2,709) |
$(16,242) |
$5,650 |
Adjusted EBITDA[2] |
$7,341 |
$10,953 |
$14,525 |
Operating Cash Flow |
$(3,700) |
$3,452 |
$(880) |
Recent Highlights
- Announced the grand opening of a medical and recreational dispensary in March under the Everest Apothecary banner in Las Cruces, New Mexico, increasing the Company’s retail footprint to 34 stores across the state.
- Increased wholesale penetration in the first quarter to more than 30% of total doors in Colorado and New Mexico.
- Lowell Herb Co. pre-roll sales increased more than 3x quarter-over-quarter in Colorado, where it continues to be the #1 pre-roll in the state.
- Wana gummy sales up more than 2x quarter-over-quarter in New Mexico.
First Quarter 2024 Financial Results
Total revenue in the first quarter of 2024 increased 4% to $41.6 million compared to $40.0 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period, partially offset by continued pricing pressure and the proliferation of new licenses in New Mexico.
Gross profit for the first quarter of 2024 was $17.9 million or 43.1% of total revenue, compared to $21.8 million or 54.6% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure in New Mexico, as well as higher medical sales mix in Colorado.
____________________________ |
1 Q4 2023 Gross Profit includes one-time, non-cash inventory adjustments of approximately $13.1 million comprised of $3.1 million of product consolidation, obsolescence, and shrinkage expenses, $4.3 million of net realizable value adjustments, and $5.8 million of fair value adjustments on acquired inventory in New Mexico in 2023. |
Operating expenses for the first quarter of 2024 were $20.6 million compared to $16.2 million for the same quarter last year. The year-ago period benefitted from a payroll tax credit of $3.9M. The remaining increase was primarily driven by personnel expenses and four-wall SG&A costs associated with 21 additional stores in Colorado and New Mexico that are still ramping.
Loss from operations for the first quarter of 2024 was $2.7 million compared to income from operations of $5.6 million in the same quarter last year. Net loss was $16.1 million for the first quarter of 2024 compared to net income of $1.7 million for the same quarter last year.
Adjusted EBITDA for the first quarter of 2024 was $7.3 million compared to $14.5 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses associated with the 21 additional stores that are still ramping.
As of March 31, 2024, cash and cash equivalents were $13.2 million compared to $19.2 million on December 31, 2023. Total debt as of March 31, 2024, was $159.7 million compared to $156.8 million on December 31, 2023.
Conference Call
The Company will conduct a conference call today, May 15, 2024, at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2024.
Schwazze management will host the conference call, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing [email protected].
Date: Wednesday, May 15, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (888) 664-6383
International dial-in: (416) 764-8650
Conference ID: 84167910
Webcast: SHWZ Q1 2024 Earnings Call
The conference call will also be broadcast live and available for replay on the investor relations section of the Company’s website at https://ir.schwazze.com.
Toll-free replay number: (888) 390-0541
International replay number: (416) 764-8677
Replay ID: 167910
If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
About Schwazze
Schwazze (OTCQX: SHWZ) (Cboe CA: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to explore taking its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale.
Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector.
Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth. To learn more about Schwazze, visit https://schwazze.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include financial outlooks; any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of our management team for future operations; expectations in connection with the Company’s previously announced business plans; any statements regarding future economic conditions or performance; and statements regarding the intent, belief or current expectations of our management team. Such statements may be preceded by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intends,” “plans,” “strategy,” “prospects,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Therefore, forward-looking statements are not guarantees of future events or performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified. Consequently, actual events and results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) regulatory limitations on our products and services and the uncertainty in the application of federal, state, and local laws to our business, and any changes in such laws; (ii) our ability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (iii) our ability to identify, consummate, and integrate anticipated acquisitions; (iv) general industry and economic conditions; (v) our ability to access adequate capital upon terms and conditions that are acceptable to us; (vi) our ability to pay interest and principal on outstanding debt when due; (vii) volatility in credit and market conditions; (viii) the loss of one or more key executives or other key employees; and (ix) other risks and uncertainties related to the cannabis market and our business strategy. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.
Investor Relations Contact
Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
[email protected]
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended March 31, 2024 and December 31, 2023
Expressed in U.S. Dollars
March 31, |
December 31, |
||||
2024 |
2023 |
||||
ASSETS
|
|||||
Current Assets |
|||||
Cash & Cash Equivalents |
$ |
13,151,317 |
$ |
19,248,932 |
|
Accounts Receivable, net of Allowance for Doubtful Accounts |
3,356,032 |
4,261,159 |
|||
Inventory |
26,382,184 |
25,787,793 |
|||
Marketable Securities, net of Unrealized Loss of $347,516 and Loss of $1,816, respectively |
108,583 |
456,099 |
|||
Prepaid Expenses & Other Current Assets |
3,502,310 |
3,914,064 |
|||
Total Current Assets |
46,500,426 |
53,668,047 |
|||
Non-Current Assets |
|||||
Fixed Assets, net Accumulated Depreciation of $10,061,700 and $8,741,782, respectively |
31,326,000 |
31,113,630 |
|||
Investments |
2,000,000 |
2,000,000 |
|||
Investments Held for Sale |
– |
202,111 |
|||
Goodwill |
67,492,705 |
67,499,199 |
|||
Intangible Assets, net Accumulated Amortization of $36,483,160 and $32,706,765, respectively |
162,391,482 |
166,167,877 |
|||
Other Non-Current Assets |
1,328,187 |
1,263,837 |
|||
Operating Lease Right of Use Assets |
34,575,832 |
34,233,142 |
|||
Deferred Tax Assets, net |
992,144 |
1,996,489 |
|||
Total Non-Current Assets |
300,106,350 |
304,476,285 |
|||
Total Assets |
$ |
346,606,776 |
$ |
358,144,332 |
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|||||
Current Liabilities |
|||||
Accounts Payable |
$ |
9,443,233 |
$ |
13,341,561 |
|
Accrued Expenses |
8,106,618 |
7,774,691 |
|||
Derivative Liabilities |
1,319,845 |
638,020 |
|||
Lease Liabilities – Current |
5,186,316 |
4,922,724 |
|||
Current Portion of Long Term Debt |
29,579,713 |
3,547,011 |
|||
Income Taxes Payable |
28,235,039 |
25,232,782 |
|||
Total Current Liabilities |
81,870,764 |
55,456,789 |
|||
Non-Current Liabilities |
|||||
Long Term Debt, net of Debt Discount & Issuance Costs |
130,120,753 |
153,262,203 |
|||
Lease Liabilities – Non-Current |
30,735,072 |
30,133,452 |
|||
Total Non-Current Liabilities |
160,855,825 |
183,395,655 |
|||
Total Liabilities |
$ |
242,726,589 |
$ |
238,852,444 |
|
Stockholders’ Equity |
|||||
Preferred Stock, $0.001 Par Value. 10,000,000 Shares Authorized; 82,185 Shares Issued and |
|||||
82,185 Outstanding as of March 31, 2024 and 85,534 Shares Issued and 85,534 Outstanding as of |
|||||
December 31, 2023. |
82 |
86 |
|||
Common Stock, $0.001 Par Value. 250,000,000 Shares Authorized; 79,168,539 Shares Issued |
|||||
and 78,248,389 Shares Outstanding as of March 31, 2024 and 74,888,392 Shares Issued |
|||||
and 73,968,242 Shares Outstanding as of December 31, 2023. |
79,169 |
74,888 |
|||
Additional Paid-In Capital |
202,677,665 |
202,040,968 |
|||
Accumulated Deficit |
(96,843,602) |
(80,790,927) |
|||
Common Stock Held in Treasury, at Cost, 920,150 Shares Held as of March 31, 2024 and |
|||||
920,150 Shares Held as of December 31, 2023. |
(2,033,127) |
(2,033,127) |
|||
Total Stockholders’ Equity |
103,880,187 |
119,291,888 |
|||
Total Liabilities & Stockholders’ Equity |
$ |
346,606,776 |
$ |
358,144,332 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Operating Revenues |
|||||
Retail |
$ |
37,633,252 |
$ |
35,820,111 |
|
Wholesale |
3,898,320 |
4,058,925 |
|||
Other |
69,421 |
121,900 |
|||
Total Revenue |
41,600,993 |
40,000,936 |
|||
Total Cost of Goods & Services |
23,667,319 |
18,152,163 |
|||
Gross Profit |
17,933,674 |
21,848,773 |
|||
Operating Expenses |
|||||
Selling, General and Administrative Expenses |
11,835,818 |
10,100,934 |
|||
Professional Services |
1,671,881 |
1,187,364 |
|||
Salaries |
6,880,988 |
4,695,971 |
|||
Stock Based Compensation |
253,916 |
214,544 |
|||
Total Operating Expenses |
20,642,603 |
16,198,813 |
|||
Income from Operations |
(2,708,929) |
5,649,960 |
|||
Other Income (Expense) |
|||||
Interest Expense, net |
(8,307,369) |
(7,745,854) |
|||
Unrealized Gain (Loss) on Derivative Liabilities |
(681,825) |
8,501,685 |
|||
Other Loss |
10,500 |
– |
|||
Loss on Investment |
(33,382) |
– |
|||
Unrealized Gain on Investment |
(347,516) |
1,816 |
|||
Total Other Income (Expense) |
(9,359,592) |
757,647 |
|||
Pre-Tax Net Income (Loss) |
(12,068,521) |
6,407,607 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Less: Accumulated Preferred Stock Dividends for the Period |
(2,155,259) |
(2,029,394) |
|||
Net Income (Loss) Attributable to Common Stockholders |
$ |
(18,207,934) |
$ |
(283,965) |
|
Earnings (Loss) per Share Attributable to Common Stockholders |
|||||
Basic Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.01) |
|
Diluted Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.06) |
|
Weighted Average Number of Shares Outstanding – Basic |
76,006,932 |
55,835,501 |
|||
Weighted Average Number of Shares Outstanding – Diluted |
76,006,932 |
101,608,278 |
|||
Comprehensive Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Cash Flows from Operating Activities: |
|||||
Net Income (Loss) for the Period |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities |
|||||
Depreciation & Amortization |
5,096,314 |
6,151,395 |
|||
Non-Cash Interest Expense |
1,031,431 |
991,184 |
|||
Non-Cash Lease Expense |
2,871,226 |
2,251,459 |
|||
Deferred Taxes |
1,004,345 |
(637,225) |
|||
Loss on Investment |
202,111 |
– |
|||
Change in Derivative Liabilities |
681,825 |
(8,501,685) |
|||
Amortization of Debt Issuance Costs |
421,512 |
421,513 |
|||
Amortization of Debt Discount |
2,303,246 |
1,999,933 |
|||
(Gain) Loss on Investments, net |
347,516 |
(1,816) |
|||
Stock Based Compensation |
640,974 |
214,544 |
|||
Changes in Operating Assets & Liabilities (net of Acquired Amounts): |
|||||
Accounts Receivable |
905,127 |
(118,181) |
|||
Inventory |
(587,900) |
(3,023,251) |
|||
Prepaid Expenses & Other Current Assets |
411,754 |
(3,036,801) |
|||
Other Assets |
(64,350) |
360,674 |
|||
Change in Operating Lease Liabilities |
(2,348,703) |
(1,531,765) |
|||
Accounts Payable & Other Liabilities |
(3,566,401) |
(3,464,671) |
|||
Income Taxes Payable |
3,002,257 |
5,299,403 |
|||
Net Cash Provided by (Used in) Operating Activities |
(3,700,390) |
(879,861) |
|||
Cash Flows from Investing Activities: |
|||||
Collection of Notes Receivable |
– |
10,631 |
|||
Purchase of Fixed Assets |
(1,532,287) |
(2,913,394) |
|||
Net Cash Provided by (Used in) Investing Activities |
(1,532,287) |
(2,902,763) |
|||
Cash Flows from Financing Activities: |
|||||
Payment on Notes Payable |
(864,938) |
– |
|||
Net Cash Provided by (Used in) Financing Activities |
(864,938) |
– |
|||
Net (Decrease) in Cash & Cash Equivalents |
(6,097,615) |
(3,782,624) |
|||
Cash & Cash Equivalents at Beginning of Period |
19,248,932 |
38,949,253 |
|||
Cash & Cash Equivalents at End of Period |
$ |
13,151,317 |
$ |
35,166,628 |
|
Supplemental Disclosure of Cash Flow Information: |
|||||
Cash Paid for Interest |
$ |
4,515,205 |
$ |
6,540,748 |
MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Interest Expense, net |
8,307,369 |
7,745,854 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Other (Income) Expense, net of Interest Expense |
1,052,223 |
(8,503,501) |
|||
Depreciation & Amortization |
5,618,834 |
6,612,814 |
|||
Earnings Before Interest, Taxes, Depreciation and |
|||||
Amortization (EBITDA) (non-GAAP) |
$ |
2,909,905 |
$ |
12,262,774 |
|
Non-Cash Stock Compensation |
253,916 |
214,544 |
|||
Deal Related Expenses |
637,761 |
1,195,802 |
|||
Capital Raise Related Expenses |
20,760 |
35,068 |
|||
Severance |
484,561 |
118,436 |
|||
Retention Program Expenses |
807,500 |
280,632 |
|||
Pre-Operating & Dark Carry Expenses |
1,053,837 |
391,917 |
|||
One-Time Legal Settlements |
417,653 |
– |
|||
Other Non-Recurring Items |
754,751 |
25,707 |
|||
Adjusted EBITDA (non-GAAP) |
$ |
7,340,644 |
$ |
14,524,880 |
|
Revenue |
41,600,993 |
40,000,936 |
|||
Adjusted EBITDA Percent |
17.6 % |
36.3 % |
View original content:https://www.prnewswire.co.uk/news-releases/schwazze-announces-first-quarter-2024-financial-results-302146858.html
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